Core Insights - Olive Garden is expected to increase menu prices in the near future, aligning them more closely with inflation rates of 2.5% to 3% over the next four quarters [1] - Over the past five years, Olive Garden has maintained pricing approximately 20% below the overall consumer price index (CPI), which has risen by nearly 23% during that period [2] - Same-store sales for Olive Garden have declined for two consecutive quarters, with a drop of 1.5% last quarter and 1.8% in the previous quarter [3] Pricing Strategy - Darden's CFO indicated that Olive Garden's pricing has been "very modest," with only a 1% increase in menu prices last quarter [2] - The company has taken a lower pricing approach compared to other Darden brands and the broader restaurant industry [5] Consumer Sentiment - Darden's CEO noted that consumers are increasingly concerned about inflation and the job market, which has affected sales to customers below the median income [4] - The focus remains on delivering brand promise and value to consumers, especially during economic challenges [6]

Core Viewpoint - Darden Restaurants reported better-than-expected quarterly earnings, driven by stronger restaurant margins, despite a miss in same-store sales growth primarily at Olive Garden [5][10]. Financial Performance - Darden Restaurants achieved quarterly earnings of $2.65 per share, surpassing the Street's estimate of $2.61 [5]. - The company maintained a positive same-store sales gap compared to industry peers, attributed to conservative pricing strategies [7]. Analyst Ratings and Price Targets - Analyst Sara Senatore maintained a Buy rating and raised the price target from $180 to $185 [3]. - Analyst Andrew Strelzi reiterated a Market Perform rating with a price target of $165 [12]. - Analyst Eric Gonzalez maintained an Overweight rating with a price target of $170 [14]. - Analyst Brian Harbour reaffirmed an Overweight rating and set a price target of $175 [17]. Market Trends and Consumer Behavior - There is a noted softness in same-store sales growth, particularly at Olive Garden, with low-income consumers cutting back on visits year-over-year [6][11]. - LongHorn Steakhouse outperformed the casual dining industry by 480 basis points in sales and 430 basis points in transaction growth [11]. - Management's full-year comps guidance was below consensus, indicating potential challenges in maintaining performance against peers [16]. Strategic Insights - Analysts suggest that Darden's focus on margin expansion and cost control is a counterbalance to slower demand growth [4]. - Marketing opportunities for Olive Garden are highlighted, particularly in enhancing its everyday value proposition [18].

Access your favorite topics in a personalized feed while you're on the go. download the app Olive Garden's parent company says the Italian chain is bucking industry traffic trends and luring in diners by not raising prices as much as its competitors. Despite this, Olive Garden's same-restaurant sales in the quarter fell by 1.5% year-over-year, Vennam said. He attributed the fall to its "decision to minimize pricing." Advertisement Related stories In the year to late May, Olive Garden raised prices by about ...

Core Insights - Darden Restaurants, Inc. reported better-than-expected fourth-quarter earnings results and increased its quarterly dividend [2][3] - Sales grew 6.8% year-over-year to $2.957 billion, although this fell short of the analyst consensus estimate of $2.975 billion [2] - Adjusted EPS of $2.65 exceeded the consensus estimate of $2.62 [2] Financial Performance - Consolidated same-restaurant sales for the quarter remained flat [2] - For FY25, Darden expects EPS from continuing operations to be in the range of $9.40 to $9.60, with sales projected between $11.8 billion and $11.9 billion, compared to the street view of $11.948 billion [3] - The company anticipates same-restaurant sales growth of 1.0% to 2.0% and plans to open 45 to 50 new restaurants [3] Dividend and Stock Performance - Darden's Board of Directors declared a quarterly cash dividend of $1.40 per share, representing a 6.9% increase quarter-over-quarter, payable on August 1 [3] - Darden's shares rose 1.5% to close at $154.29 on Thursday [4] Analyst Ratings and Price Targets - Stifel cut its price target on Darden from $190 to $180 while maintaining a Buy rating [5] - B of A Securities raised its price target from $180 to $185, also maintaining a Buy rating [5] - Stephens & Co. reiterated Darden with an Equal-Weight rating and maintained a price target of $165 [5]

Darden Restaurants CEO Rick Cardenas said there's been a small shift from fast food to casual dining. American fast-food consumers have expressed frustration with rising prices. Several casual chains now offer discounted combo deals to attract diners seeking better value. NSIDER TODAY Bull Email address Bull Customers fed up with increasingly high prices at fast-food restaurants are taking action, and they may be turning to places like Chili's and Applebee's instead. This story is available exclusively to B ...

Olive Garden said it plans to keep raising its menu prices — even as top executives admitted that sales dropped in the latest quarter as inflationhammered customers pulled back on visits. According to financial chief Raj Vennam, "The pullback is mostly at the below-median household income," adding, "our other [customer] groups are stable or growing." They will rise again this month, executives said, without giving specifics. "Last year we had a little too high profit margin," Vennam said. "It was industry l ...

Rick Cardenas, president and CEO at Darden Restaurants, said Thursday (June 20) that those concerns are greatest among consumers with incomes below the median household income of $75,000 and especially among those with incomes below $50,000. "These impacts were even greater in our fine dining brands, so that's why you saw fine dining had a more negative comp than others," Cardenas said. The same-store sales figures for the company's fine dining segment include The Capital Grille. They do not yet include the ...

Financial Data and Key Metrics Changes - For fiscal year 2024, total sales grew by 8.6% to $11.4 billion, with adjusted diluted net earnings per share increasing by 11% to $8.88, exceeding initial EPS guidance despite a challenging sales environment [12][25][37] - In Q4, total sales reached $3 billion, a 6.8% increase year-over-year, with same restaurant sales flat, outperforming the industry by 80 basis points [26][28] - Adjusted diluted net earnings per share from continuing operations increased by 2.7% to $2.65, with adjusted EBITDA of $523 million [28][30] Business Line Data and Key Metrics Changes - Olive Garden's total sales increased by 0.7%, but same restaurant sales decreased by 1.5%, while guest counts outperformed the industry by 60 basis points [34] - LongHorn Steak House saw total sales rise by 7.2%, driven by a 4% increase in same restaurant sales, outperforming the industry by 480 basis points [35] - The other business segment, including Ruth's Chris, experienced increased sales but combined negative same restaurant sales of 1.1% [36] Market Data and Key Metrics Changes - Industry same restaurant sales decreased by 0.8% in Q4 and 1.4% for the full fiscal year 2024, with guest counts down 3.5% and 4.7% respectively [8][12] - Darden's same restaurant sales growth of 1.6% for fiscal 2024 outperformed the industry by approximately 300 basis points [37] Company Strategy and Development Direction - The company remains focused on long-term growth and shareholder value, with a strategy that includes disciplined cost management and maintaining competitive advantages [12][19] - Leadership changes have been made to enhance brand development and operational efficiency, including the transition of key executives to new roles [20][22] - The integration of Ruth's Chris Steak House has been completed successfully, achieving expected synergies and contributing to EPS accretion [18][17] Management's Comments on Operating Environment and Future Outlook - Management noted a weaker consumer environment, particularly among lower-income households, impacting transaction volumes [56][60] - There is cautious optimism for gradual improvement in underlying traffic trends throughout fiscal 2025, with guidance for same restaurant sales growth of 1% to 2% [49][50] - The company plans to maintain modest pricing strategies, with expectations of pricing in line with inflation [51][52] Other Important Information - Darden returned $1.1 billion to shareholders in fiscal 2024, including $628 million in dividends and $454 million in share repurchases [37] - The board approved a 7% increase in the quarterly dividend to $1.40 per share, implying an annual dividend of $5.60 [42] Q&A Session Summary Question: Sales outlook for the year and brand performance - Management expects underlying traffic trends to gradually improve, with a blended estimate of 1% to 2% same restaurant sales growth for the full year [49][50] Question: Marketing approach and consumer behavior - The company plans to focus on profitable sales growth rather than deep discounting, maintaining modest pricing strategies [55][60] Question: Olive Garden's traffic and marketing strategies - Olive Garden will continue to emphasize its value proposition and innovate its menu to attract customers, focusing on profitable sales growth [68] Question: Development environment and new builds - The company is optimistic about its new restaurant pipeline, despite higher construction costs and longer timelines [110]

Get Darden Restaurants alerts: | --- | --- | --- | |-----------------------|-------|-------| | | | | | DRI | | | | Darden Restaurants | | | | $155.45 | | | | +3.49 (+2.30%) | | | | 52-Week Range $133.36 | | | | ▼ | | | | $176.84 | | | | Dividend Yield 3.37% | | | | P/E Ratio 18.22 | | | | Price Target $173.81 | | | Examining Darden's same-store sales growth provides a clearer picture of the company's performance relative to its established restaurant base. For Q4 2024, Darden reported flat same-store sales ...

Shares of Darden Restaurants rose 1.3% to $153.93 as of 10:48 a.m. ET Thursday. They are down 6% year-todate. Darden explained that the gains were driven by the addition of 80 Ruth's Chris locations, and 37 other net new restaurants. Darden purchased Ruth's Chris last year for about $715 million. Key Takeaways Darden Restaurants (DRI) shares advanced Thursday after it posted a better-than-expected adjusted profit as it benefited from the acquisition of Ruth's Chris Steak House. Same-store sales, which didn' ...